What Sony's PlayStation Timetable Says About the Industry

The Nov. 15, 2003 North American launch of the PlayStation 4 will be the first time a Sony (NYSE: SNE  ) (NYSE: SNE  ) (NYSE: SNE  ) console has not debuted first in Japan (the new system is slated for an early 2014 launch in Japan). On the other hand, Sony's recently-unveiled PS Vita TV will hit Japanese stores on Nov. 14, 2013 and not make it to North America until sometime in 2014.

Perhaps even more so than in the West, the Japanese gaming industry exists in a state of transition. What does Sony's release timetable for its PlayStation platforms say about the industry and the direction it is heading?

Sins of the father
The PlayStation 3, overseen by the father of PlayStation, Ken Kutaragi, got off to a slow start. The system featured highly complex and specialized architecture that impeded early development efforts on the system. Its CELL processor required that software be coded to the unique specifications of the machine in order to achieve optimal results. As such, the majority of multiplatform software released in its lifecycle performed better on the Xbox 360.

This helped Microsoft (NASDAQ: MSFT  ) to establish its system as the preferred HD choice for gamers in North America. The PS3's complex architecture also created problems for Sony in Japan. Most Japanese publishers were ill-equipped to handle the transition into HD development, and the difficult to develop for PS3 only made matters worse. The system launched with a high-price point, leading to slow sales, until the issue could be remedied, and encouraging the Japanese gaming public to continue their focus on handheld devices.

An eye for design
The PlayStation 4 is Sony's first home console to be primarily designed by a Western team. The project was spearheaded by industry veteran Mark Cerny, who fought for the console's adoption of developer-friendly X86 hardware and looks to have done a commendable job in shaping the product for success.

Cerny recently stated the reason the PlayStation 4 would not launch in Japan until 2014 is a lack of software that appeals to the Japanese consumer base. The idea of a PlayStation console launching without games that speak to the Japanese populace would seem to border on absurdity, but the industry has changed.

Getting outplayed
Most Japanese publishers currently exist in a state of weakness. Flashback to the mid-90s when gaming was dominated by the island nation, with Western developers and publishers trying to establish their position in the market. On the strength of popular media imports like Pokémon and Dragon Ball Z, the Japanese anime aesthetic was becoming increasingly popular on Western shores, and it seemed unthinkable that there would come a time when the Japanese did not shape the gaming industry.

Companies like Squaresoft, prior to its merger with then-rival Enix, achieved tremendous success on the PlayStation and the PlayStation 2 and began plotting ill-fated media expansions that involved costly CGI films. Almost across the board, Japanese publishers failed to prepare for the HD era.

Some, like Nintendo (NASDAQOTH: NTDOY  ) (NASDAQOTH: NTDOY  ) (NASDAQOTH: NTDOY  ) , are still having trouble with the switch. Heading into the latest console cycle, the Japanese industry is in disarray, and its assets seem like a little more than an afterthought.

Japanese publishers simply did not position themselves for the rising costs and demands of the console gaming market. They are failing to create software that has appeal outside of niche markets. Game series like Final Fantasy, Metal Gear Solid, and Resident Evil once spearheaded the push to make gaming a more immersive and emotionally-driven experience. Each of these series has lost relevance in recent years, trying to incorporate elements of Western design and often losing aspects of their appeal brand identity in the process.

As Western development has come to define the console space, Japanese efforts have become focused on handheld gaming and the mobile market. Companies like Capcom, Konami, Namco, and Square Enix are now positioning themselves for futures that look largely dependent on mobile and F2P models because they lack the resources for large-scale development. For example, Capcom, a name once synonymous with quality and some of the biggest franchises in gaming, has an approximate $152 million in cash. That's about 2 to 3 failed AAA releases away from being broke.

What does this mean for other platform holders?
Microsoft seems to have given up on Japan as a viable territory. After devoting substantial resources to bringing exclusive Japanese-developed content to its Xbox 360, there exists no comparable effort for the Xbox One. The system's media center features are geared toward a Western audience, and the device does not need to achieve good Japanese traction to be a success for Microsoft.

Meanwhile, Nintendo's Wii U has proven to be a non-starter in the territory. Nintendo-published titles like Pikmin 3 and The Wonderful 101 have failed to jump-start the system, with the latter being a major sales disaster. Nintendo will continue to receive Japanese support for its 3DS handheld even if publishers are spurning the Wii U, though markedly less than it saw with the original DS handheld. As a publisher, Nintendo is still strong, but its handling of HD development and the Wii U are troubling for the future.

Setting sun?
With Microsoft writing off Japan and the Wii U a resounding dud, it is not surprising that Sony chose to delay the home territory launch of the PlayStation 4. By focusing on its PS Vita and PS Vita TV, the company has the chance to appeal to the current Japanese market and ready the right software to make its new device more appealing. The state of Japanese game development makes Sony's ecosystem and release strategy a sensible one, but it is also worrying for the state of the industry at large.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 24, 2013, at 4:53 PM, lacerz wrote:

    There's a scrivenor's error in the first sentence. The launch is set for 2013.

  • Report this Comment On September 24, 2013, at 4:58 PM, speculawyer wrote:

    This is just smart strategy. Sony knows that the Japanese people will not buy the Gaijin console, so they are delaying their Japanese launch to make sure more PS4 units are available for the USA and Europe. They can launch in Japan later . . . no rush for that market due to the Nationalism of Japanese consumers.

  • Report this Comment On September 24, 2013, at 5:54 PM, polecat99 wrote:

    Dumb article that ignores all of history.

    EVERY single console of the dozens in history have been custom hardware/proprietary design that requires intimate knowledge of said hardware to develop games. From Nintendo, to Sony, to Sega, etc. etc. EVERY.SINGLE.ONE and this is because consoles are NOT supposed to be PC's.

    Microsoft, in it's normal fashion, decided to screw console gamers and instead favor a "PC in a box" and pawn it with heavy marketing as a "console"... which is why just about every XBOX game is also on PC, but far, far superior on the PC. Basically, if you own a PC, there is little reason to own an XBOX as most all XBOX games are easily ported to PC, but get better details/resolution and options.

    Sony going this route is just further destroying the console world and basically walking console gamers to the PC platform. People should just consider sitting out the PS4 and Xbox One and invest in a good gaming PC. With Valve's SteamBox, this is already the direction things are going. Console gaming and console programmer talent is a being killed off for lesser quality, carbon copy games.

  • Report this Comment On September 24, 2013, at 8:35 PM, engguy wrote:

    "With Microsoft writing off Japan and the Wii U a resounding dud, it is not surprising that Sony chose to delay the home territory launch of the PlayStation 4"

    Whoever wrote this is a freaking idiot. The main reason why the games industry is declining is because of a resounding social pressure against gaming by older adults, and a lack of money for entertainment in the younger generations. An average game will run you $80 rather than $50-60, and young adults have the lowest starting salary in decades along with highest living costs in as much. The market is simply drying up because of underlying sociopolitical reasons rather than the superficial things this author came up with.

  • Report this Comment On September 24, 2013, at 9:15 PM, Bunnyking77 wrote:

    I think it's funny no one who writes about games takes into account the home loan and real estate market crash and the rise of unemployment in the US.

    It's the elephant in the room that everyone seems to ignore.

  • Report this Comment On September 25, 2013, at 2:28 AM, spinod wrote:

    One small error. Metal Gear is still a leader, it was one of the first games to truly embrace HD and still is with MGS5. It has always had a western appeal, mixed with a japanese style. Thats why its popular on both sides.

    The Japanese market milks games more than Activision, thats why no one cares about a majority of them anymore....

  • Report this Comment On September 25, 2013, at 8:46 AM, rovertdude wrote:

    I stopped reading at "The Nov. 15, 2003".....

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